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By Ravi Ladduwahetty

The state and commercial banks have reduced interest rates in accordance with Finance Minister K.N. Choksy's call to the banking community last week to do so.

However, certain members of the banking community said that the Central Bank of Sri Lanka should further bring down the Statutory Reserve Ratio which will enable the banks to bring down the rates further.

Members of the business community said that there should not be any discrimination between the sectors in determining the lending rates.

Following are the individual interviews these banking and business personalities had with the Daily News.

Former Chairman of the Bankers' Association and Country Head of Citibank NA Kapila Jayawardena said: "We have decreased the lending rates by 1 - 1.5 percent across the board and we will continue to review these rates on a regular basis. We will be continuing to reduce these rates based on the fact that the whole interest rate regime is on the way down in Sri Lanka.

There is a lot of emphasis laid down by all banks to reduce the interest rates. We are also looking up to the Central Bank of Sri Lanka to assist us by reducing the Reserve Ratio and their bank rate to facilitate a further reduction which currently stands at 10 percent. A Reduction in the Reserve Rates will reduce the intermediary costs by the banking system which will facilitate a reduction in the overall interest rates, he said.

Hatton National Bank Managing Director/CEO, Rienzie T. Wijetilleke said:" We have reduced our lending rates to the best of our ability and especially for the middle income groups such as for small and medium industry and also for housing. We will divide the risk and the price elements."

Sampath Bank Managing Director Anil Amarasuriya said:"We have been reducing the lending rates in consonance with the overall reduction in the lending rates. We are able to reduce the lending rates when the costs of deposits decline.

Asked for the specific percentage points of the reduction, he said: "We cannot specifically state the percentage as it is done on a case by case basis deepening on the risk factor.

Whenever the overall costs of the funds decline, we pass on the benefit of the reduction to the clients."

However, he said that there is a time lag in the reduction of the rates whenever there is a reduction of the REPO rates as the revised rates would be applicable to the new deposits and also when the old deposits are renewed. However, the lower risk borrowers will have the benefit of the reduced interests more, he said.

Commercial Bank Deputy General Manager (Personal Banking) Ravi Dias said:" We have conveyed to the Central Bank the reduction of the lending rates by three percentage points.

People's Bank Chairman Lal Nanayakkara said:" We have paid heed to the Finance Minister's call for the reduction of the rates and we will be making the adjustments within the next day or two.

Bank of Ceylon Chairperson Sumi Munasinghe said: "We were the first bank to accede to the Finance Minister's request."

Federation of Chambers of Commerce and Industry of Sri Lanka President Nihal Abeysekera said:" The decision of the Government to reduce interest rates is commendable but the reduction of these rates should be across the board and not on a selective basis.

Asked what type of industrial growth he sees for 2003 following the reduction of interest rates, he said that it would be difficult at this stage, but was confident that there would be at least a one percent growth rate.

He said that it would be prudent for all the lending rates to be single digit as the deposit rates are single digit.

Ceylon Chamber of Commerce Chairman Tilak De Zoysa said: "The CCC had wanted the Government to reduce interest rates for a long time, but around 80 percent of the loans which are disbursed now are over 22 percent. He commended the Government for the move in reducing the rates but a further reduction should be effected in the small and medium industry sector, which he said, was the growth area in the future.

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